US - Unsecured Consumer Lending Landscape

12 March 2016

I've been heads down building Vouch Financial for the last year or so - my posting dropped off to nothing for quite a while. I recently took the opportunity to pull my head up and survey the consumer lending landscape.

I counted 21 US players out there, (I'm not sure iLoan counts since it looks like a separate face of SpringLeaf - which I also count, but we'll leave it for now).

At this time I was most interested in looking at two criteria:

Minimum FICO Score - This data wasn't easy to come by - and I don't have it for about half of the lenders on my list, but I think it shows that there is very healthy competition at the 660+ FICO range, with a few lenders at 640, and then 5 lenders below 640. This makes a lot of sense, at the lower FICO Scores the loan sizes are lower, and which drags down average loan size, pushes unit profitably number higher. Not to mention the underwriting is more difficult - verification is usually more work.

Charter / Licenses - I have worked with a couple of different small industrial banks in various capacities so this has always interested me. It very much feels like the "sell picks and axes" strategy of this new online lending evolution, rather than being the gold miner. Familiar names show up:

WebBank (Utah chartered), which lets rates reach 36% - which helps for those lower FICOs. They have a reputation for being expensive, and I thought I saw a mention from Lending Club that they were looking at adding an additional bank to originate business through

Cross River Bank (CRB - New Jersey chartered), rates top out at 30%, but CRB is heavily represented here, I know that they have been extremely aggressive about acquiring platforms.

Celtic Bank looks to only be used by Karrot and First Electronic Bank (Owned by Fry's Electronics) looks to have made their debut with Payoff Loans. I have worked with them before; I knew they were looking to get into the space, good to see more Utah banks compete with Web Bank.

State Licenses seem to be relatively prevalent, although in most cases that means those platforms are very limited in the states they can lend to.

While I think the market can handle more consumer lenders, with the current batch, and the downturn in VC financing that has hit in the last 6 months, I don't expect to see many more entrants this year. I do expect that we'll see several in this list fail to gain traction and scale and probably disappear this year. Here's hoping it's not Vouch ;).

Full list with some additional fields (if you have updates or additions, please let me know @prescottnasser):